Beyond Meat Fights for Survival

Summary

From a fundamental perspective, Beyond Meat is one of the worst stocks in the entire market. Revenue growth has been paltry: The company expects the figure to reach about $330 million in 2025, roughly 10% higher than it was six years earlier despite a huge increase in the number of products offered. Profitability is distant. In 2024, on an operating basis Beyond Meat lost 45 cents from every dollar of sales. The company’s current target is to reach EBITDA (earnings before interest, taxes, depreciation, and amortization) breakeven by the end of next year. But even that target, if reached, would still mean Beyond Meat is posting negative free cash flow. That’s a problem given that $1 billion in convertible bonds come due in March 2027. Beyond Meat has no way to repay that debt, and the credit markets know it: The bonds currently trade at about 17 cents on the dollar. In that context, the surprise is not that Beyond Meat stock is down 98% from early 2021 highs to an all-time low; it’s the fact that the stock has any value at all. Any purely financial model here would suggest that the equity is worth zero, and that in 2027 the Beyond Meat business will wind up in the hands of its bondholders. But there are two reasons why Beyond Meat still has a market capitalization of about $240 million. The first is somewhat technical. Unsurprisingly given its financial profile, BYND has been a popular trade for short sellers, who borrow the stock and then sell it, betting that they will be able to buy back shares later for a cheaper price. The trade has been so popular that those traders have to pay a fee to borrow the stock — and a portion of that fee is passed on to most shareholders. Those fees won’t cover the current stock price, but they can be material. The other reason is that there is still some hope that Beyond Meat can survive as a publicly traded company, even if that hope is quickly dwindling. Beyond Meat stock is down by nearly 50% since the beginning of November. At th...